106 Mile Transport Associates v. Koch

• Decision Date: 27 March 1987
• Docket Number: No. 86 Civ. 7190 (JMW).,86 Civ. 7190 (JMW).
• Citation: 656 F. Supp. 1474
• Parties: 106 MILE TRANSPORT ASSOCIATES, a New Jersey Partnership Comprised of Ocean Disposal Co., Inc., General Marine Transport Corp. and A & S Transportation Company, All New Jersey Corporations, Plaintiffs, and Gulf Coast Fabrication, Inc., American Waterways Shipyard Conference of the American Waterways Operators, Inc., and Gretna Machine & Iron Works, a Division of Trinity Industries, Inc., McDermott Shipyard, a Division of McDermott, Inc., Plaintiffs-Intervenors, v. Edward I. KOCH, as the Mayor of the City of New York, Harrison J. Goldin, as Comptroller of the City of New York, Harvey Schultz, as Commissioner of the Department of Environmental Protection of the City of New York, and the City of New York, Defendants.
• Court: U.S. District Court — Southern District of New York

656 F. Supp. 1474

106 MILE TRANSPORT ASSOCIATES, a New Jersey Partnership Comprised of Ocean Disposal Co., Inc., General Marine Transport Corp. and A & S Transportation Company, All New Jersey Corporations, Plaintiffs, and Gulf Coast Fabrication, Inc., American Waterways Shipyard Conference of the American Waterways Operators, Inc., and Gretna Machine & Iron Works, a Division of Trinity Industries, Inc., McDermott Shipyard, a Division of McDermott, Inc., Plaintiffs-Intervenors, v. Edward I. KOCH, as the Mayor of the City of New York, Harrison J. Goldin, as Comptroller of the City of New York, Harvey Schultz, as Commissioner of the Department of Environmental Protection of the City of New York, and the City of New York, Defendants.

No. 86 Civ. 7190 (JMW).

United States District Court, S.D. New York.

March 27, 1987.

COPYRIGHT MATERIAL OMITTED

Lawrence M. Honig, Jared Stammel, New York City, for plaintiffs.

Terri Feinstein Sassonow, Office of the Corp. Counsel of the City of New York, New York City, for defendants.

MEMORANDUM AND ORDER

WALKER, District Judge:

INTRODUCTION

Plaintiff 106 Mile Transport Associates ("106 Mile") together with plaintiff-intervenors Gulf Coast Fabrication, Inc. ("Gulf Coast"), American Waterways Shipyard Conference of the American Waterways Operators, Inc. ("American Waterways"), Gretna Machine & Iron Works, a Division of Trinity Industries, Inc. ("Gretna"), and McDermott Shipyard, a Division of McDermott, Inc. ("McDermott") bring this action against Edward I. Koch, as Mayor of the City of New York, Harrison Goldin, as Comptroller of the City of New York, Harvey Schultz, as Commissioner of the Department of Environmental Protection of the City of New York, and the City of New York ("City") to halt progress on a contract to build barges. This contract requires Far East Livingston Shipbuilding, Ltd. ("Far East"), a Singapore shipyard, to construct four barges for the City's use in towing sewage sludge to a dumping site 106 miles off the coast.

The plaintiffs' twice-amended complaint asserts two claims against the defendants: first, that the proposed use by the City of foreign barges to tow sludge will violate the Jones Act, 46 U.S.C. § 883 and second, that the contract violates various provisions of state and local law, including the competitive bidding provision of N.Y.Gen. Mun.Law. § 103 (McKinney 1986).

The defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b) and have amended their motion to keep up with plaintiffs' amendments to the complaint. The Court now grants defendants' motion. The Court concludes that all parties lack standing to bring the Jones Act Claim; that, in any event, the Jones Act claim fails to state a claim upon which relief can be granted; that all parties, save Gretna and McDermott, lack standing to assert the state law claim; that the City is entitled to summary judgment against McDermott and Gretna because their state law claim is time-barred.

FACTS

Historically, New York City has disposed of its sewage sludge, the end product of its various municipal sewage treatment facilities, by transporting and discharging it twelve miles offshore into the New York Bight Apex area of the Atlantic Ocean. In the late 1970's, it did so under an interim permit from the U.S. Environmental Protection Agency ("EPA"). However, following a 1977 amendment of the Marine Protection, Research, and Sanctuaries Act of 1972, 33 U.S.C. §§ 1401-1445, the EPA took the position that the amendment "absolutely barred all ocean dumping after December 31, 1981 of sewage sludge found harmful to the marine environment." City of New York v. United States Environmental Protection Agency, 543 F.Supp. 1084, 1086 (S.D.N.Y. 1981). The EPA refused to renew the City's permit which was to expire on December 31, 1981 and in 1980 the City litigated the issue. This Court ordered that the EPA evaluate evidence proferred by the City to make a reasoned determination as to whether a renewal of the permit would result in an unreasonable degradation of the environment. After so evaluating, the EPA concluded that continued dumping at the 12 mile site would constitute an "unreasonable degradation" of the environment. The EPA then designated a site 106 miles offshore ("106 mile site") as a "Deep Water Municipal Sludge Disposal Site".

In the fall of 1984, the City's Department of Environmental Protection ("DEP") sought private contractors to remove and dump sludge at the new 106 mile site. On October 4, 1984, the DEP issued a request for proposals ("RFP") and on December 28, 1984 a proposal was submitted by 106 Mile Joint Venture, a partnership consisting of Berman Enterprises, Inc. ("Berman") and Harbor Transportation Co., Inc. ("Harbor"). A separate proposal was submitted by A & S Transportation Co., ("A & S").

On June 10, 1985 the City rejected all proposals submitted under the 1984 RFP. In the interim, the City's Office of Management and Budget had directed that the City "purchase and retain ownership of any new marine equipment such as barges that may be required for this sewage disposal program."

On May 27, 1986, the City entered into a consent decree in this Court setting forth a schedule for the City's compliance with its agreement with the EPA to dispose of its sewage sludge at the 106 mile site. The consent decree specified that the City would purchase its own barges for sludge removal and would transport 100 per cent of its sludge to the 106 mile site with the barges by November 1987.

On April 28, 1986, recognizing that the City would need its own barges to comply with the forthcoming consent decree, the DEP issued a request for bids ("RFB") for the construction of four 15,000 ton oceangoing barges. The bid specifications required prospective contractors to comply with N.Y. Lab.Law § 220 (McKinney 1986), New York City Adm.Code §§ 343-9.0 and 343-11.0, and Mayoral Executive Order No. 50.¹

On May 7, 1986, in accordance with the terms of the RFB, the bids were opened and publically read aloud. The lowest bidder at $21 million was Far East. The second lowest bidder at $23 million was Islikawajima do Brasil Estaleiros SA, the third lowest bidder was McDermott, at $28 million and the seventh lowest bidder at $37 million was Trinity Industries, Inc. ("Trinity").² Within a day or two after the bidding results were announced, Trinity cancelled its performance bond, required under the bid specifications.

By letter dated May 27, 1986, the DEP formally notified Far East of the contract award of the contract and in a cover letter, dated July 15, 1986, to an executed contract, informed Far East that the date for commencement of the work was July 16, 1986 and the date for its completion, February 10, 1988. In a letter dated June 18, 1986, the DEP confirmed an understanding reached between the DEP and Far East that the DEP did not consider Far East subject to several New York laws, including New York Lab.Law § 220 and Mayoral Executive Order No. 50.

In February 1986, the DEP had hired 106 Mile Transport Associates ("106 Mile"), a partnership consisting of Berman, Harbor and A & S (as distinguished from 106 mile Joint Venture) to transport 10 per cent of the City's sludge to the 106 mile site from April 1986 thru November 1987 at a price of $2.4 million. This contract apparently was an interim measure to ensure compliance with the May, 1986 consent decree.

Shortly after Far East was determined to be the low bidder, 106 Mile launched a campaign to halt the construction of city owned barges. 106 Mile's first target was City Comptroller Harrison Goldin. In a series of letters between May 16 and June 26, 1986, counsel for 106 Mile urged the Comptroller to withhold his approval of the budgetary expenditures required under the Far East contract. By letter dated May 16, 1986, counsel stated that "we understand that such bids were submitted and opened on May 7, 1986 and that the low bidder was a foreign corporation." In a June 6, 1987 letter to the Comptroller, counsel indicated that 106 Mile was aware that the DEP had contracted with Far East to construct the barges and suggested that use of the barges would violate the Jones Act. The upshot of this flurry of activity was that, on July 17, 1986, the Comptroller informed 106 Mile's counsel that, despite counsel's argument, he would not interfere with the contract.

The Proceedings Before This Court

On September 18, 1986, 106 Mile, by now denominated a New Jersey Partnership consisting of Ocean Disposal Co. ("Ocean"), General Marine Transport Corp. ("GMT"), and A & S, filed the complaint in this action for declaratory and injunctive relief against the City defendants under the Jones Act and at the same time moved for a preliminary injunction.³ On October 7, 1986, the City defendants moved to dismiss the complaint under Fed. R. Civ. P. 12(b).

On October 14, 1986, the plaintiffs served an amended complaint that added allegations under the Jones Act Claim and added a new claim under various provisions of state and local law. Specifically the plaintiffs asserted that the contract violated N.Y.Lab.Law § 220 (McKinney 1986), New York City Admin.Code §§ 343-9.0 and 343-11.0, and Mayoral Executive Order No. 50 ("New York Contract Laws") because Far East does not comply with these laws.

On October 20, 1986, 106 Mile withdrew its motion for a preliminary injunction and presented applications by several parties to intervene. The Court permitted Gulf Coast, a ship builder; American Waterways, a trade association group representing companies that build and repair shallow draft commercial vessels; and Gretna, a ship building division of Trinity Industries, to intervene as plaintiffs in the action without prejudice to a subsequent motion by the City to dismiss them. With plaintiffs' motion for preliminary relief withdrawn and the government expressing its desire to move to dismiss, the Court declined to permit early discovery.

On October 30, 1986,...